A bitter pill

The Novartis case highlights the need for innovation in the public interest

The Supreme Court has commenced final hearings on a case brought before it by the Swiss pharmaceutical company, Novartis. The case disputes the denial of a patent on Novartis's anti-cancer drug Glivec. Novartis's position is that incentives to pharmaceutical innovation require stringent patent protection. But the company's definition of innovation is not one that will serve India's needs in research and development, industrial development, or public health.

At issue is a key provision in India's 2005 Patent (Amendment) Act — section 3(d). Introduced by Parliament as a health safeguard, this provision disallows product patents on modifications of existing drugs (a practice known as "evergreening"), unless those modifications demonstrate significantly enhanced therapeutic efficacy. Novartis is arguing in court to weaken the interpretation of this provision to such an extent that it would end up being a dead letter. Its claim is that by curtailing the scope of product patents, section 3(d) reduces incentives to invest in the research and development of new drugs.

This suggests a simple correlation between stronger patents and more innovation. But the recent history of pharmaceutical development presents a more complicated picture. In spite of stringent intellectual property protections, the multinational pharmaceutical industry is not particularly innovative. While this industry presents itself as an innovator in global policy debates around intellectual property, the "innovation deficit" is acknowledged within industry circles. For instance, a 2008 survey of 360 senior pharmaceutical industry executives, conducted by Deloitte, predicted that over the next decade, most research and development would not be conducted within large pharmaceutical companies. Indeed, the trend has been towards in-licensing promising molecules from smaller companies, or acquiring a smaller company altogether. Mergers and acquisitions, rather than research and development, increasingly constitute the cornerstone of the industry's business model.

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